The Queen’s New Year’s Honours list recognised David Waboso, capital programmes director for London Underground (LU), with a CBE.
David trained as a civil engineer. After a spell teaching, and then working on transportation schemes in the UK and a water supply programme in Nigeria, he was appointed project manager responsible for delivering the Docklands Light Railway’s signalling system. In 1995, he won the prestigious award of UK ‘Project Manager of the Year’ and then joined the Jubilee Line Extension team where he was instrumental in getting the extension open in time for the Millennium.
Following a spell at the Strategic Rail Authority, where he was an executive director, David was appointed LU’s director of engineering in 2005. Since then, he has led the largest upgrade in LU’s history with major improvements already completed, including the installation of new signalling on the Jubilee and Victoria lines and new trains on the Victoria and Metropolitan lines.
One of the more recent innovations which David has introduced has been ICE – Innovative Contractor Engagement. This formed the basis of the letting of the contract for the Bank station capacity upgrade project – awarded to Dragados in July 2013. The Rail Engineer visited David in his office recently to find out more about this initiative.
Upsides and downsides
Traditionally, such a project would have been carried out using an employer’s design. A consultant would be engaged to come up with the design which would then be built by a contractor.
“That has its plusses and minuses,” commented David. “The plusses are that you can, as an employer, have a design that you are satisfied with, you can have all your wishes and everything in the design and you get a chance to influence the design 100%. Then you go to competitive tender against that design.
“The downsides of it are that often you don’t know, as an employer, the tricks of the trade and often contractors come in and say, ‘You know what? I wouldn’t have built it that way.’ That happens increasingly because contractors have become very knowledgeable about design and its interplay with construction – buildability, cost and schedule. They often have their own design people anyway but, using this method, you lose the ability to get the construction contractors to influence your design.
“So one of the solutions to that is a design and build contract. That has its plusses and minuses as well. Obviously, what you do as an employer is set out your requirements – I want this building or this station or whatever. You give a high level specification and then you allow the contractor lots of room to innovate within that envelope.
“There are variants of that which are around early contractor involvement where we can have a concept design and ask the suppliers to come and tell us what they think, but they’re always quite guarded about that because they say, ‘Why should I tell you my best ideas for somebody else to go and build?’ They often prefer to use their innovation when they are building it.”
So London Underground, working with Infrastructure UK, the Treasury- led infrastructure group, developed the concept of Innovative Contractor Engagement (ICE). David described the thinking behind it.
“The idea is to allow the contractors to be really innovative against a set of high level requirements and a list of things that we value. Value for us are things like minimising closure of facilities to reduce inconvenience to customers. We want to have escalators, rather than lifts, because we need to be able to transfer loads more people; we want to have ambience, we want to be able to cool the station – these are the things that we value.
“So we wrote a list of all those things we valued and put values against them. Then we went out to tender and said this is what we want to achieve, this is when we need it done by, unless you can do it sooner, and this is what we want it to cost – or less. We put all our cards on the table and asked for some really innovative ideas.
“We also said that, if you can do it and provide value against those things, we’ll not necessarily give you the work but we will buy your ideas from you. Then we will use those ideas and give them to the successful contractor. So we incentivised them to give us their best ideas as they knew that, even if they lost the contract, we would buy those ideas off them.” We also entered a confidentiality agreement with the contractors so they would bring their best ideas forward without fear of them being made known to rivals.
In fact, LU went further than that. They also contributed to the bid costs of the contractors involved. So, with nothing to lose, the bids included all the best ideas to deliver David’s high level requirements, early and under budget.
“As it happened, on this occasion, the winning contractor had all the best ideas anyway,” David explained. “But we still bought some off the others because we want to use them in the planning process. When we go through the TWA (Transport and Works Act) process, it’s very useful to say that, if we didn’t do this, there’s another option. So we have actually used the ICE to supply those ideas.
“It’s been quite exciting for the industry and we’ve had a lot of very good feedback. And it had the desired result. Our initial estimate was that the cost of this project would be in the region of £600 million, and we’ve saved £50 million through this process and above all, we’ve got fantastic value from the winning design.
“We paid some money out. We bought some of the bidders’ ideas and we’ve also paid some of their bid costs, although being frank the feedback is we didn’t pay enough, so we are looking at that for future schemes.”
More to come
David is obviously very pleased with the result, and will do it again.
“To me, the headlines are how it’s driven value, which is exactly what we wanted it to do. The scheme looks to be a very, very attractive scheme against our baseline estimates and has saved us a lot of money. Secondly, it has allowed us to buy innovative ideas from the losing bidders that will enable us to use them in the future. I suppose thirdly it’s pioneered this for the industry and for us, so we’ll be using this and developing it; ICE is going to get better and better so we will be using this more as we go forward for certain types of schemes.”
The idea of giving the bidders a basic list of requirements and values, and then asking them to come up with the best way of delivering that list, seems to have worked well. And paying bid costs, as well as buying novel ideas off the unsuccessful bidders, has taken a large part of the risk out of the bidding process. Not surprisingly, it has attracted interest from other organisations.
“People are coming to talk to us about how you do it,” David stated. “It’s quite a novel technique and people are very interested, maybe because it seems to be working because it’s driven by value – and don’t forget value is different to cost. The fact that this scheme is also coming in saving us money is great, but the core thing is how you get people to deliver what you want within your overall estimate. Obviously, if they can do it for less that’s even better, but the days of just taking the lowest compliant tender are, hopefully, behind us. What we want to do is take the best value tender; value being a combination of output and cost.
“Sometimes there is a value if you are prepared to pay more. We might say the fact that we don’t have to close this station or this line while they are building it is of such value to us – because the customers will value being able to use the station – that we are prepared to pay a bit extra for that. In the old days it was just cost and we’d say, ‘Well, we’d better shut the station next time provided we get a very low bid.’ So value is a slightly different proposition to cost.”
Cooperation and consulting
Unsurprisingly, one of those interested parties was Network Rail. “We share a lot of ideas with Network Rail and they share a lot of their ideas with us,” commented David. “We want to take this a stage further where we actually do far more together as two big client groups in the rail industry. We’ve both got our settlements now in terms of our spending, we are coming together now.
“There is some stuff that obviously is going to be different, like our structure gauge is much smaller for example, it’s a deep and narrow tube, but track is track apparently! So we do recognise the need to do even more together – we share ideas and innovations and we have a very close working relationship. We just
pick up the phone and talk to each other; we have joint meetings and there’s no formality required. We’re both railway companies and we talk to each other. I think it’s best if it’s informal because if it gets formal it becomes cumbersome and stiff – we meet and we talk and share ideas.”
“I think certainly the Olympics and the 150 celebrations have put LU right at the centre of the world’s stage, not just as an operator but as a capital delivery organisation,” explained David. “We are the oldest metro, we invented it with the City Metropolitan Railways, and we are the first metro to have undergone this massive scale of renewal. It really is massive. What we’ve undergone, and are still undergoing, is our biggest ever rebuilding programme at the busiest time in our history. The fact that we are coming through it successfully and have overcome the inevitable problems, is now turning people’s heads to say, ‘Blimey, there is something there we can learn from and copy.’ So a lot of metros are now talking to us to say can you help us with X, Y, and Z or can you advise us on A, B and C?
“I think if we do go into this, it would be in the advisory kind of consulting, helping owner clients manage and specify and run big capital programmes and upgrades. That would include operations and maintenance advice but on the upgrade side because we run integrated project teams which include the operations and maintenance people. You can’t just do a couple of projects and operate a railway without having that. How you start commissioning it, where to train the drivers, how do you site the signals, all that stuff is fundamental so we have operation based people as part of those integrated teams.
“The big thing we’ve got to watch is that we don’t create a distraction for the best people. Actually if you manage it right it’s a motivation for very good people because they go and are able to see what’s going on in other places and come back refreshed. I also think it helps you keep and retain the best people who then see a career path, not just in what they are doing here.”
London Underground obviously has a lot still to do – the current programme of renewals will last until 2030. However, with the help of ICE, and some other clever initiatives, it is well on track to keep London moving while all the work is done.